Shazam, the mobile app that instantly recognizes songs and TV commercials, has announced a $40-million round of funding led by Mexican billionaire Carlos Slim. The app, which users turn on when they hear a song that they want to identify, said the funding is being headed up by Slim’s company, America Movil, one of the world’s largest wireless communication firms. Shazam Chief Executive Rich Riley called the investment a milestone.

“It’s a great continuation of the incredible momentum that we have,” he said.

Though Shazam is not profitable, the company said it has generated revenue of $300 million in the past 12 months from song purchases. When users purchase a song from iTunes or other digital stores after tagging it on Shazam, the company gets a cut of the sale.

“We intentionally operate at a slight loss so we can focus on continuing to grow our user base, deepen the experience and accelerate our revenue growth,” Riley said.

Additionally, Shazam said it has worked on more than 300 TV ad campaigns. The London-based company began using its software to tag TV commercials a few years back, and it charges companies it works with six-figure fees to include the Shazam logo on their ads, letting users know that they can expand the commercial through their smartphones. The company last received funding, for $32 million, in September. Since then, Shazam said it has more than tripled its active user base to 70 million.
“Shazam is defining a new category of media engagement which combines the power of mobile with traditional broadcast media and advertising to create compelling value-added experiences for consumers, content providers and brands,” Slim said in statement.

Points of leadership interest in Shazam

Shazam shows the hallmarks of other new-technology companies. Andrew Fisher is a serial innovator and entrepreneur. He is technologically-savvy but not a geek whose interest in technology holds him back from financially shrewd actions. He has attracted Rich Riley as CEO so that Fisher can focus on the new investment required for growth. The last statement above indicates his strategic thinking and the need to re-define what is the emerging market of consumer engagement.

Health warning

All pioneering ventures are vulnerable. This one may succeed, perhaps as an acquisition for its technology, or as a stand-alone global corporation. LWD does not recommend investment opportunities. Its posts are primarily intended as materials of interest to business students and researchers.